Inexorable Rise of Open Innovation and Crowdsourcing

Imagine that you are planning a big surprise party. You want it to be entertaining, spectacular, memorable and different. You could plan and project manage every element of the party yourself: the theme, venue, music, food, drink, entertainment, games, diversions etc. Or you could involve a number of people to help you with their ideas and their skills. One person could manage all aspects of the venue, someone else could design special decorations, another person could put together a music mix and so on. If you do it all yourself then you are in complete control, you have sole responsibility and you can keep the whole thing a surprise but you have to remember to do everything and it is only as good as your ideas. If you bring in a group of friends and experts to help then you can harness their imaginations; you can bounce ideas off each other. You have to delegate tasks which involves collaboration, supervision, letting go and an element of risk. Keeping the whole thing a surprise is more difficult but can be done. The choice between doing it all yourself and doing it with a group is the choice between a closed and an open model.

There was a time not very long ago when companies primarily used closed models for all their new product development. They focused on their own resources – research, development, marketing, etc – to bring new products to market. This model gave them control and seemed to work well.

Nowadays most CEOs see collaboration as key to their success with innovation. They know they cannot achieve their innovation targets using internal resources alone. So they look outside for other organizations to partner with. A good example is Mercedes and Swatch who collaborated to produce the Smart car. When Mercedes wanted to produce an innovative town car they did not choose another automobile manufacturer, they partnered with a fashion watch maker. Each brought different skills and experiences to the team.

The next step beyond collaboration is open innovation; a concept developed by Henry Chesbrough to describe the process of harnessing external resources to work alongside your team to develop new products and services. This is something that many leading companies, including Proctor and Gamble, IBM, Unilever, Reckitt Benckiser, BMW, Nokia and Kimberly-Clark have focused on as a way of driving innovation. Open innovation replaces the vertical integration of processes within one company with a network of collaborators working on innovation projects. Using outsiders can speed up processes, reduce costs, introduce more innovative ideas and reduce time to market.

Kimberly-Clark reduced the time is takes to bring out new products by 30 percent through open innovation. It launched Sunsignals in just six months by collaborating with a smaller company, SunHealth Solutions. Sunsignals is a self-adhesive sensor that changes color when the wearer is in danger of burning in the sun. Proctor and Gamble aims to source 50 percent of its innovations from outside using open innovation. Early results include new products such as Mr. Clean Magic Eraser and Pringles Prints.

Crowdsourcing is an extrapolation of Open Innovation in which you throw out a challenge to a group of people that you may or may not know and solicit their ideas and solutions for your issue. Many web-based companies specialise in different crowdsourcing fields. So if you want a name for a new brand of product you can get many suggestions by using the crowdsourcing site Naming Force. If you have a tough programming problem you could use Topcoder.com who will set the challenge for ace freelance programmers from around the world. Similarly if you have a difficult technical or scientific challenge you might use Innocentive or Nine Sigma.

There is a powerful surge towards open innovation and crowdsourcing. These concepts hold the enticing promise of turbo-charging your new product development.

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Paul Sloane writes, speaks and leads workshops on creativity, innovation and leadership. He is the author of The Innovative Leader published by Kogan-Page.